Equity in School Finance – Maryland

Date: 21 Nov 2008 | posted in: equity, From the Desk of David Morris, governance, The Public Good | 0 Facebooktwitterredditmail

Maryland’s legislature enacted a new education finance system in 2002. It provides for $1.3 billion annually in additional school funding, and targets this increase to districts with lower wealth and more high-need students. Maryland is one of the first states to reform its school finance system based on the cost of providing every student with the opportunity to achieve the state’s achievement standards.

The struggle for greater equity of opportunity in Maryland schools dates to 1983, when the state Supreme Court rejected an equity challenge to the education finance system while also concluding that the state constitution guarantees the right to an adequate education. On this basis, Baltimore City and the ACLU of Maryland filed suit against the state in 1994. The court agreed that the education provided to Baltimore students was inadequate, and a 1997 settlement provided for a small increase in funding. When the state failed to provide requested increases in school funding, breaching the terms of the settlement, the case returned to court. In June 2000 the Circuit Court found in favor of the plaintiffs and ordered the state to provide additional funding of $2,000 to $2,600 per pupil.

In the meantime, the state had established a bi-partisan commission (the Thornton Commission) to make recommendations on improving adequacy, equity, and accountability in the state’s education funding system. The discrepancies in the system were clear: districts received an average of $2002 per pupil in 2001, but as little as $492 and as much as $2973, depending on district wealth. Actual statewide per pupil spending in 2001-2002 was $8351.[1] District allocations were adjusted on more than 40 criteria, but the low benchmark made it difficult for poor districts to make up the difference. Baltimore City received the highest allocation, but with the lowest median household income it provided less than half the state average in local funding per pupil.

Both the commission and the New Maryland Education Coalition hired firms to perform adequacy costing-out studies. One study used the “professional judgment” methodology, while the other used both the professional judgment and “successful schools” approach. Their results were similar; both recommended an increase of $2 billion or more in total school revenues, about one-third more than the existing level, with much of the new spending targeted at schools with the largest “adequacy gap.”

The commission issued its final report in January 2002. It concluded that the state is responsible for establishing school standards, ensuring adequate funding to meet those standards, and holding schools accountable on educational outcomes. The state already had performance standards in place. It recommended a $1.1 billion increase in state education funding, with the greatest proportion of the increase going to districts with the largest adequacy gap. By phasing in the money over five years, no school need experience a decrease in state funding. For accountability, it recommended that each district be required to outline the steps being taken to improve student performance.

That April the legislature adopted a bill closely modeled on the commission’s recommendations as the Bridge to Excellence in Public Schools Act (known as the Thornton law). Under the new system, the state ensures that every school district has the funds to provide an adequate education based on cost studies, including programs for at-risk students. A geographic-cost-of-education index is scheduled for introduction in 2005, and the total number of funding adjustment calculations was reduced from more than 40 to 5. The new system aims to make state funding sustained and predictable in order to promote long-term planning.

The text of Senate Bill 856 is available from the Maryland legislature, as are the documents of the Commission on Education Finance, Equity and Excellence.

Formore information on the school finance litigation in Maryland, the Thornton Commission, and the process leading to approval of the new law see Maryland Enacts Modern, Standards-Based Education Finance System, by Molly Hunter, and other resources at ACESS, a Project of the Campaign for Fiscal Equity.

For updated information on the status of the Thornton law and Maryland education, see the Maryland Budget and Tax Policy Institute’s Back to the Basics on Thornton: Why it Was Needed and What it Does.

[1] The Maryland Budget and Tax Policy Institute explains: “Under prior law, the starting point for calculating the state’s share of education costs was to take 75 percent of statewide per pupil costs from three and four years earlier. For example, in 2001, the “benchmark” per pupil spending level was $4,005, which was equal to 75 percent of the average per pupil costs in 1997 and 1998.

Theformula then assumed that this benchmark figure would be equally funded by the state and local governments. Thus, the state’s share was calculated to be half of the $4,005 benchmark cost, or $2,002.50.

Workingthrough the steps in the formula thus far results in a state aid level equal to 37.5 percent of average per pupil costs from three and four years earlier.

From this baseline level other adjustments were made based on a jurisdiction’s wealth status. This resulted in some jurisdictions receiving more than $2,002.50 per pupil and some receiving less. For example, in 2001, after adjustments, Baltimore City received $2,973 per pupil (the most of any jurisdiction)and Worcester County received $492 per pupil (the least of any jurisdiction).”

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